Dr.Muhammad Yunus: Father of microcredit and Social business
Early Life
He was born on June 28, 1940, in Chittagong under the control of the British Colony. He was the third child of Bengali Muslim couple Hazi Dula Mia Shoudagar and Sufia Khatun. He spent his boyhood in a rural village, but in 1944 his family moved to the city of Chittagong and enrolls at the Lamabazar Primary School. Later, he participated in Boy Scouts when he enrolled in the Chittagong Collegiate School. He got an opportunity to travel to countries like West Pakistan, India, Europe, and the USA because of his participation in Boy Scouts. He has always been a meritorious student and ranked 16th in Matriculation Examination out of 39,000 students in East Pakistan.
After completing his Matriculation Examination from Chittagong Collegiate School he enrolled himself in Chittagong College. Along with the study, he was good at extracurricular activities, he received several awards in cultural activities. He completed BA and MA from the Department of Economics department of Dhaka University in 1960 and 1961 respectively. Later, he started working as a research assistant with Nurul Islam and Sobhan in Economic Research during that time he joined Chittagong College as an Economics lecturer. At the same time, he set up a packaging factory.
He received a Fulbright scholarship from Vanderbilt University in 1965. In 1969, he completed his Ph.D program from the same University. There he met Vera, she was a daughter of Russian immigrants, she was studying Russian Literature at that University. They got married in 1970, but that marriage didn’t last long after the birth of their first child Monica. They were separated in 1979.
In 1969, he got an opportunity to be an Economics assistant professor at Middle Tennessee State University, where he worked till 1972. During the Bangladesh Liberation War in 1971, Dr. Yunus was in the US for his work. Like all fellow Bangladeshi, Dr. Yunus was shocked by the news of the East Pakistan Attack on Bangladesh. In 1971, he formed a citizen’s committee in Nashville to raise funds for Bangladesh and convince the US Congress to stop military assistance to Pakistan. In 1972, In spite of having a prosperous career abroad, he decided to return after the liberation war. Dr. Yunus started working in the government planning commission. However, that job was not fascinating to him anymore, so he decided to shift his career path, as a result, he started teaching as an associate professor at Chittagong University. Then he married Afroza Yunus. During the 1974 famine, he had witnessed the sorrows of the poorer society of Bangal, which inspired him to work on the reduction of poverty and unemployment. As a research project, he established Nabajug (New Era) Tebhaga Khamar (three share farm), which the government later adopted as the Packaged Input Programme.
Introduce Micro-Credit
In 1976, when he visited Jobra village near Chittagong University, Dr. Yunus noticed that the Jobra women withdrew money from moneylenders with a significantly large return rate. Moreover, the borrowers even had to give up on their profit to return the loans. According to the TedX speech of Dr. Yunus, he gave $27 dollars to 42 women as a loan, so that they can have their own business and set themselves free from the loan shark. Lending small amounts of money gave birth to the concept of microcredit. To continue the process, he secured a credit line from the state-owned Janata Bank. But it was not an easy task, and he had to persuade conventional banks because, in the first place, they were not ready to cooperate with the process. So, he offered himself as a guarantor, and he also took all the risk of borrowers. Including banks in this process is called Micro- Finance. That is why Dr. Yunus is known as the father of Micro-Finance.
Founded Grameen Bank
In 1983, Dr. Yunus founded Grameen Bank (Bank for the poor) by combining two concepts: Micro-credit and Micro-Finance. This bank is run with the principle of “ Loans are better than charity to finish poverty”. It is the only lawyer-free bank in the whole world that diminishes the collateral banking system. Grameen Bank stands on the reverse psychology of conventional banking systems. They provide small long-term loans on easy terms, so almost anyone can get bank credit. In recent times, the average amount of money borrowed is eight thousand takas. Grameen Bank also provides solidarity lending. Solidarity lending is a lending practice where small groups borrow collectively and group members encourage one another to repay. With this small amount of money, the borrower starts their own business and pays back all the credit with a certain amount of interest rate to the bank. If one person in the group failed to make a profit, the rest of them will collaboratively repay the money. It is the backbone of Micro- Finance.
In 1989, he established the non-profit private organization Grameen Trust, which uses microcredit as a tool following Grameen Bank’s approaches all over the world. The majority of the people thought it would collapse one day, the moneylender will not be able to repay the lent money. But, Dr. Yunus never lost hope, currently, GB is running its operation in more than 35,000 villages of Bangladesh.
According to the GB summary paper, last year it provided $380 million to 3.62 million loan seekers, and the interesting factor is 94% of the customers are women. Dr. Yunuses Grameen Bank has changed the lives of many poor families, they have their own homes, children are going to school, they don’t have to worry about their next meal. After fourteen years of the establishment of GB, 2 million people have been able to start their own business, so we can assume that by the end of 2021 the number increases at an alarming rate. At the age of 71, Dr. Yunus retired from the managing director position.
Though GB has changed many lives by providing small loans, in contrast, there is a portion of those who have to go through a lot of hardship to repay the interest rate. But this opposite side of the story never came in front of the media, because during the 1970-2000 rural part of our country was out of media coverage. But in 2010-2011 they started receiving media attention when people gave interviews regarding those issues.
Establish Social Business
To promote and implement Yunus’s philosophy and solve issues related to social business, in 2006 Dr. Yunus established the Yunus Center. Right now he is the chairman of the research center and the executive director is Ms. Lamiya Morshed. They are actively working to utilize United Nations Millennium Development Goals in Bangladesh with the aim to make our country free from poverty by the end of 2030. He is also the founding member of Global Elders and Nelson Mandela is the chairman. This year, Dr. Yunus and Grameen Bank were awarded the Nobel prize in peace for creating economic and social development for the deprived part of our society.
In 2011, Dr. Yunus founded Yunus Social Business-Global Initiatives (YSB) with the aim to develop and implement his social business ideas to solve issues related to social problems around the globe. In 2012 he was appointed as the chancellor of Glasgow Caledonian University where he served until 2018.
Dr. Yunus invested $1.4 million of his awarded money to implement his new social business plans. One of the plans is, he will make a low-cost, high-nutrition food processing factory for the poor, and the rest of the money will be directly invested to set up an eye hospital for the poor in Bangladesh. Later, in 2007, he opened a yogurt factory in Dhaka in partnership with French food company Danone. Currently, Grameen 6.6 million members are buying this yogurt for their kids at an affordable price that is 25 taka a cup. These cups are biodegradable, as they use cornstarch, using solar panels for electricity including effectively use rainwater as well. Grameen micro borrowers and micro vendors parallelly work to execute the whole working process. Women take loans to buy cows and sell milk to the front end. Micro vendors in this cycle sell the yogurt door to door. Yunus yogurt factory employs 15-20 people within a 20-mile radius and also provides a source of income for more than 1600 people. Dr. Yunus and Danone planned that they would reinvest the revenue and they would only take out the initial cost of capital to continue the process. Yunus operates his social business like a profit-maximizing business. Though the main purpose of running this business is creating sustainable social impact by creating income for disadvantaged populations or servers them as its primary customers. In 2007, he published a book named Creating a World without Poverty: Social Business and the Future of Capitalism where he demonstrated how creative business ideas can solve society’s ground-level serious problems while maximizing profits.
Inspired by his groundbreaking business ideas more than 100 developing nations adopt his philosophy including developed countries like the USA, to acknowledge his contribution to social development In January 2008, Houston, Texas announced January 14 as Muhammad Yunus Day. Again in 2010, he published another book with the title Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs.
